It started as a school project by Christian Gelleri, an economics teacher in southern Germany who wanted to teach a group of 16-year-olds about finance in a novel way — by creating their own money, to be used in local shops and businesses. They called it the “chiemgauer” and eight years on, the project has turned into the world's most successful alternative currency.
But this isn't a story about Germany's waning enthusiasm for the euro. It's about a growing number of chiemgauer users who see the currency as a great way of keeping money within the businesses and communities where it is generated and earned, rather than pouring it into the coffers of chain stores and globalised banks.
Gelleri put his students in charge of designing the currency vouchers, as well as managing its accounts and administering the scheme. The currency was pegged to the euro on a one-to-one basis, with notes in denominations of one to 50. In its first year, the notes struggled to gain acceptance in what is one of the most prosperous and conservative parts of Germany, achieving a turnover of just €75,000. Only 130 individuals signed up, with just a few local stores willing to take the new currency. But last year turnover reached €5.1m, and the chiemgauer, named after a region in Bavaria, is now accepted by more than 600 businesses in the Rosenheim-Traunstein area where it operates. It is estimated that around 2,500 people use it and along the way it has also earned more than €100,000 for local non-profit organisations.
In the U.K.
In Britain, there have been various attempts to introduce local currencies to stimulate the local economy, such as Lewes, Totnes and Brixton pounds, but to date none has taken off.
Gill Seyfang, a specialist in “new economics”(University of East Anglia) says: “The chiemgauer has been massively successful, it's off the scale in comparison with others. We are actually quite used to alternative forms of money — after all, that's what Airmiles or loyalty points from supermarkets are. But why haven't the Lewes pound or the Lets [local exchange trading schemes] been more successful? There are all sorts of reasons, but principally it seems that people love the idea of it, but in practice it doesn't seem to function very well. The currency doesn't achieve critical mass and shops don't want to take it because their suppliers won't accept it, and so on. It doesn't deliver enough material benefits for it to be wanted for its own sake. But you also have to look at these schemes in other ways. Often it's about local engagement and rewarding neighbourliness.” The chiemgauer has managed to bring on board local co—operative banks and credit organisations, and it's even possible to pay in chiemgauer using a debit card, run by Regios, an association of co-operative banks.
How it works
What makes the chiemgauer different to conventional currency is that it automatically loses value if you don't spend it. Unlike traditional money that can be saved, the chiemgauer is only valid for three months — the idea being that it must be spent, thereby boosting the local economy. If the notes aren't spent, they can be renewed by buying a stamp that costs two per cent of the note's face value — so over a year, the currency depreciates eight per cent Notes can be renewed up to seven times.
That might sound off-putting, but users are happy with the system. Angela Hamberger from the small town of Trostberg, explains how it works: “You can use the chiemgauer in all sorts of shops — from the hairdresser's to the baker's. You just have to register in the scheme and go to a participating bank to change your euro into chiemgauer. It's worth it to support the community.” When registering, users nominate one of 230 local charities and organisations to receive three per cent of their chiemgauer transactions. And the depreciation? “Ah, I only paid that once, and what's two per cent after all?” she says. When it comes to paying with a debit card, co-operative banks such as Kreissparkasse, Raiffeisenbank and VR-Bank provide transaction services and exchange points. The depreciation helps to accelerate circulation of the currency and boost local spending. Its advocates estimate that the chiemgauer circulates nearly 2.5 times faster than the euro. Participating shops and businesses have to pay a one—off registration fee of €100 and a monthly charge of €5 to €10 depending on their turnover. If they exchange chiemgauer into euro, they have to pay a five per cent transaction fee. The charges are used to cover the scheme's running costs, with the remaining 60 per cent going to participating charities. The chiemgauer network also provides participating businesses with an entry in their directory and website, as well as access to various promotions which can be a significant bonus. But notably absent from the scheme are large retailers. Martin-Christoph Ziethe from Chiemgauer eV, the organisation behind chiemgauer, says: “The aim of a regional currency is to promote the local economy, which also benefits the environment because the carbon footprint of local logistics is clearly much lower. It is far healthier economically and environmentally to have several small high street businesses rather than one megastore.” However he is quick to point out that they are not against big business: “Large retailers must deal with international suppliers, so it makes no commercial sense for them to accept the chiemgauer because of the five per cent conversion fee. But we do see large transactions in chiemgauer involving non-local products. For example, car dealers operate in the scheme.” There's still a long way to go — the €5m circulation of the chiemgauer accounts for only 0.2 per cent of the region's gross product, but the brains behind the currency, Christian Gelleri, estimates it could account for as much as 50 per cent in the next few years.
Under the Regiogeld organisation that promotes local currencies in Germany, there are now 28 schemes up and running with about 2,650 participating businesses and another 37 schemes in development. But while disenchantment with the euro is growing — polls show that half the country does not believe in rescuing Greece and around 40 per cent would vote for a eurosceptic party — Gelleri does not see alternative local schemes as a threat to the future of the single European currency. “Regional currencies are based on the euro and complement it. There is a place and a need for both within the current system.” — © Guardian Newspapers Limited, 2011
